“This imbalance in the world is a big source of concern, plus there are other fault lines we can continue to come to.”

Rajan said the markets are worried about countries’ debt loads, banks and future bailouts.

“In Europe they have substantially less fiscal room than in the US, especially in southern European countries,” he said. He added that the US government can expand its programs, but that the quality of its expenditures matters.

To lower the high unemployment rate in the US—which is at about 10 percent—the country needs to shift from an economy that’s excessively dependent on housing and construction and focus on its strengths, such as intellectual capabilities, he added.